Unanswered Questions Trouble Legislators as Medicaid Deadline Looms

The Christie administration is making a massive shift in the way it delivers healthcare to the poor and working poor, moving thousands of Medicaid patients into managed care HMOs. With the first deadline set for next week, the process is already well underway.

But initial progress has not been smooth. That was one of the issues discussed at a senate health committee hearing on Thursday, as legislators from both parties pressed the administration for more information on both the proposed changes and the problems.

The committee seemingly did not get the answers it wanted. Later that day Senate President Stephen Sweeney (D-Gloucester) announced that his party would make its objections known to the federal government by issuing a resolution protesting the administration's plan to reduce funding to Medicaid and FamilyCare.

The hearing was called by Sen. Loretta Weinberg, (D-Bergen), to give representatives from the departments of health and human services an opportunity to respond to issues raised by healthcare providers at a forum this spring.

Although three out of four of the state’s Medicaid patients already receive care through HMOs, the managed care “carve in” under consideration now would shift in the coming months at least 150,000 additional patients into one of four HMOs that contract with the state. The first round, with a July 1 target date, is a group of 45,000 that include developmentally disabled patients, children in state care and other fee-for-service clients. In the fall, another 110,000 patients – including participants in an AIDS treatment program and so-called “dual-eligibles,” who are both old and very sick – will follow.

The changes are part of more than half a billion in spending cuts to healthcare programs proposed by Gov. Christie in the FY2012 budget; the managed care shift is expected to save at least $16 million. Some of the changes included in the budget, which must be adopted by the end of June, also require federal approval. The Medicaid and FamilyCare programs insure 1.3 million residents at a cost of nearly $10 billion last year, with the tab split in half by the state and federal governments.

Income Eligibility

But the issue that continued to attract significant attention during Thursday’s hearing, as it has in the past, involves a change in income eligibility requirements for parents. The administration has called for lowering the income ceiling for parents from 133 percent of the federal poverty line to between 25 percent and 30 percent, which is about $100 to $140 a week for a family of three. Although children will still be admitted and no parents will be dropped from the program, this change would impact 23,000 adults who are eligible today.

"I just don’t understand, where is a family of four earning $6,000 a year supposed to go," Weinberg asked, using figures for a family that might be earning too much to qualify under the new rules.

Department of Human Services Commissioner Jennifer Velez, who oversees most of the Medicaid programs, explained that eligibility levels for parents had been adjusted in the past during difficult budget years -- and this year’s budget is by far the worst. The state has lost $1 million in stimulus funds that were used last year for Medicaid, she said, and the program costs continue to grow.

"I think it’s fair to say -- and many of you on this committee may agree -- that Medicaid is ripe for reform," she said. ”We may debate the how and when but the state must redesign the program if we expect to protect benefits to the most vulnerable -- the very low-income, the aged, blind and disabled populations and children,” Velez continued.

But when pressed by Sen. Joseph Vitale (D-Middlesex), who helped to create FamilyCare, Velez conceded that data showed that when parent eligibility was cut in the past, the program lost kids from the income range affected, even though they would still qualify.

"I think that’s pretty stark," Vitale said. "There’s a cause and effect with not enrolling parents. We know that when parents enroll, kids come with them.”

Sen. Robert Singer, (R-Ocean), also questioned the long-term savings. Singer, who used to run a hospital-affiliated health center, asked if cutting health insurance spending would drive up the cost of Charity Care, a state program that reimburses hospitals hundreds of millions of dollars each year for care they provide to uninsured patients.

"If they are off FamilyCare and are now on Charity Care, what is my net gain?" he asked. Velez said while this connection is considered, it is almost impossible to track cause-and-effect dollars this way.

Probing Problems

The commissioner also discussed some of the problems the state has faced in preparing to shift the first round of Medicaid patients to HMOs. Healthcare providers and patients have raised questions about the process, and the confusion was exacerbated by a state computer error that generated letters with an incorrect enrollment date. As a result, some of the patients will be delayed a month and the Human Services department has posted detailed information on its website to help the public.

Velez conceded the managed care transfer had not been easy, in part, she said, because of a lingering resistance to HMOs in general. But the department has held several meetings with the insurance companies to connect them with providers. It has also worked to connect individual patients with the proper HMO, she said, recalling two emails she received just the night before from legislators concerned about constituents.

"The bottom line is change is hard," Velez said. "But we’ve put as much info out there as possible, made it as widely available as possible."

Weinberg raised questions about how this shift would impact continuity of care especially for patients with special needs. Velez noted that continuity of care was one of the most important things to provide these patients, and that HMOs will not make changes without a patient assessment and input from the family and doctors. If needed, they will add doctors to the network to meet patient requirements. "There is no drop-off in care," Velez said.

Singer worried aloud that the change would restrict patients from seeking specialized treatment out of state and suggested a streamlined system so families could get quick and fair decisions on such requests, without getting bogged down in appeal processes and other red tape. Velez assured him HMOs were having these discussions already.

"I don’t want us to be making decisions based on dollars and cents and not on what’s best for a child," Singer said.

Not Enough Preparation

But patient advocates and some providers say the state has not done enough to prepare for these significant reforms, leaving home health aides, nurses and others who often care for some of the most vulnerable patients struggling to contract with an HMO before July. They say healthcare staffing agencies are still working to set up billing systems that link to the insurance companies, while their patients are concerned that whatever HMO they pick might not include their longtime providers.

“There are still plenty of roadblocks,” said Jean Alan Bestafka, CEO of the Home Health Services and Staffing Association.

Vitale also pushed for details on the "continuity of care" clause contained in HMO contracts, and what that would mean for about 1,400 adults who will actually lose coverage through the proposed changes. This group includes FamilyCare clients who have adult children and earn too much to qualify for general assistance benefits and a group of about 100 from a program called Health Access that dates from the early 1990s, but has long been closed to new members.

Velez said that although she did not have the language for each contract handy, in general the provisions were designed to protect people who were cut off in the middle of a hospital stay, or some other acute-care treatment. The clause is not intended to provide a health insurance bridge, paying for chronic ongoing care, for months on end, she warned.

"A loss of coverage is a loss of coverage,” she said. “At some point, a line has to be drawn. At some point, they’re uninsured."